PRECISE SOFTWARE CASE ANALYSIS

Problem:

When and how to introduce an end-to-end new product to the market?

Issues:

1. Should we (Precise) introduce a new product in Open World conference 2000? What could be the impact if we delay to offer an end-to-end solution in the performance management space?

2. What is the best selling strategy for the new product?

3. What is the best pricing strategy for the new product?

4. Should we maintain a single sale force or separate sale force dedicated to the new product? What kind of commissions and how much authority should we set up for the sales force regarding to the new product?

5. How can we deliver the value of the new product to meet our customer expectation …show more content…
Average price of Precise /SQL had been between $15,000 and $25,000. Precise often offered discounts around 25% which allowed sales force to sell the product easier as well as DBAs can make their decision easily to purchase without approve by the CIO. In addition, price can be varied greatly depending on the customers and other factors. They charged more for higher-powered computing environments, which means the price is based on the value that the customers receive from the performance management.

C) Distribution Analysis:

There are three common channels for distributing commercial software applications such as direct sales, value-added resellers (VCRs), and systems integrators. VCRs and systems integrators earned a margin of about 30-35% on the software sales. And original equipment manufacture (OEM) agreement is popular in smaller niche areas. Precise sells its products through a duel-channel distribution system. Internationally, the company sells through both VARs and system integrators in most countries. 17 account executives are hired to do direct sell and also sell through distributors in most countries, and each is paid a salary of $75,000 and a 5%-9% rate high commission. The average sale of each rep is $800,000 annually and earned $300,000 for the highest. Therefore, the operating expenses are extremely high (sales and marketing is 35% of the total operating expense)